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US cities react in fury to FCC's $2bn break for 5G telcos: We'll be picking up the tab, say officials

Federal price cap will undercut existing agreements, says just about every big city in America

A plan to impose a federal price cap and one-size-fits-all model for the rollout of next-generation mobile networks has been met with fury by US cities.

New York, Los Angeles, San Francisco, Philadelphia, Chicago, Las Vegas, San Diego, Seattle and dozens of other cities have responded in anger to a public comment period on two proposals from the Federal Communications Commission (FCC).

Those proposals would override the cities' ability to charge mobile operators for positioning 5G cell towers on their property and instead impose a single, federal fee.

The FCC claims that the proposal will remove $2bn in "unnecessary fees" and lead to $2.5bn in additional network investment. The plans – which the FCC intends to vote on next week – would also oblige local governments to make a decision on applications for new cell sites within three months and would remove several common reasons for denying such applications.

While the FCC claims this would be a great development, the local and state governments whose authority would be undermined by the proposal are notably less excited.

"We disagree with the Commission’s flawed and overreaching effort to mandate how cities manage small cell deployments," said [PDF] the city of Chicago.

"We respectfully request that the Commission delay consideration… until the document reflects a balanced approach respectful not just of industry demands but also of cities’ obligations to fairly, safely, and efficiently manage the public way and other public assets."

The mayor of Los Angeles complained [PDF] that the plan will "serve only to undercut the many successful public-private partnerships that have, and are, developing in today’s marketplace," adding that they "will insert confusion into the market, and sow mistrust between my technology team and the carriers with whom we have already reached agreements."

Brotherly love?

The city of Philadelphia made much the same point [PDF]: "The City has already established a fee structure and on-line application process to apply for small cell deployment that has served the needs of its citizens without prohibiting or creating barriers to entry for infrastructure investment."

The FCC's flat fee of $270 per year per site with a $500 application fee for the first five applications and $100 thereafter doesn't cover the actual costs of maintaining such sites, numerous other cities have complained.

In effect, cities will end up paying mobile operators to maintain their networks that those companies are expected to make billions of dollars of profits over the next decade.

San Francisco made the same point. It already had agreements and contract in place for 5G networks, and the FCC's proposed order "puts these innovative local approaches at risk when it seeks to impose centralized control over inherently unique, local conditions and processes."

It also questions [PDF] the FCC's justification for imposing this approach: that the fixed-fee approach would encourage greater investment elsewhere. That analysis "appears to compare apples and oranges," complains San Francisco, adding that there is "no basis for concluding that the Proposed Order will increase investment in rural areas or anywhere else."

Las Vegas has called the proposal "unreasonable" and "extreme"; Seattle noted its "strong opposition"; Cincinnati expressed "deep concern"; Delaware said it is an "unreasonable overreach"; and on and on and on. There are dozens of cities from every state and of every size criticizing the proposal in the strongest terms.

All in favor

So who is actually in favor of the proposals?

Well, AT&T, Verizon and T-Mobile USA – the three main mobile operators in the United States. They are all "strongly supportive" of the proposal. Notably their responses are formulated as summaries of meeting that their executives have held with FCC Commissioners in recent weeks.

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Also in favor: all the cable/mobile/telco lobbying groups, including the NCTA, CTIA, CCIA and various other acronyms. Many of those letters also relay the meetings they have held recently with FCC leadership.

What is all the more stark with this proposal from the FCC is that its chair Ajit Pai has repeatedly claimed that his philosophy behind decision-making is "light touch" regulation. At the same time, another proposal currently under discussion that is also causing a lot of anger considers scrapping a federal price cap.

In that case, however, Big Cable is in favor of the proposal because it applies to a cap on what they are allowed to charge other ISPs to access their networks – meaning that competitors can offer the same service to consumers under their brands.

Ever since Ajit Pai took over as chair of the FCC, the former lawyer for Verizon has faced fierce criticism for doing the bidding of telco companies, often repeating their arguments and ignoring opposing viewpoints.

In this 5G plan, such blatant favoritism is particularly stark. Rather than lifting regulations, Pai's FCC is seeking to impose them. And those most impacted by it are united in opposition. The only people in favor of the current proposals are the corporations that will benefit the most from it.

Done deal

And the FCC Commissioners have already signaled their intent to ignore opposition. "Policymakers can't claim success if 5G is only deployed in big cities like New York and San Francisco," commissioner Brendan Carr, who has championed the measure, said in a statement.

"Those 'must serve' cities will get next-gen mobile broadband almost regardless of what we do. Success means every community getting a fair shot at 5G. To achieve that success, we need to update our rules to match this revolutionary new technology."

Policy analysts note however that there is nothing in the proposals that oblige, or even ensure, that the core argument for the plan – that it will result in 5G rollouts to smaller towns and cities – ever occurs. This is no requirement on mobile operators to expand anywhere that doesn't make financial sense for them, and no obligation to use the money "saved" by paying lower fees in big cities to expand in less profitable areas.

One expert has already made it plain that he expects the approach to expand, rather than reduce, the digital divide between urban and rural areas. He has called the proposal "a large transfer of wealth from the public to private enterprises" that would "leave American communities and states no better positioned to bridge digital gaps."

In short, it is yet more shoddy policymaking from a federal regulator that appears to take its cue exclusively from the companies it is supposed to be overseeing. ®

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